EXHIBIT 10.7
ADDENDUM AGREEMENT
BETWEEN
WASHINGTON HOSPITAL SERVICES, INC.
AND
POINTSHARE CORPORATION
THIS ADDENDUM, executed this 3/rd/ day of June, 1999, modifies the Alliance
Agreement between Washington Hospital Services, Inc. and Pointshare Corporation
effective October 6, 1998 ("Original Agreement"). In the event that there shall
be any inconsistency relating to the subject matter between any term or
condition of this Addendum and any term or condition of the Original Agreement,
the term or condition of the Addendum shall govern and control.
1. The following new section is added to the Original Agreement as Section
4(1):
"1) Promotion outside Washington. The Washington State Hospital Association
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(WSHA) and Washington Hospital Services (WHS) agree to use their best
efforts to assist Pointshare in launching the Member Services and other
Pointshare services in states other than Washington. Such assistance shall
include, but not limited to, out of state speaking engagements, being a
reference, giving recommendations and providing a general endorsement, and
introductions to keys persons in other state hospital associations and
their for-profit affiliates."
2. The following new section is added to the Original Agreement as Section 5,
and all subsequent Sections are re-numbered accordingly:
"5. COLLABORATION ON ▇▇▇▇▇▇.▇▇▇ INITIATIVE
a) Web Site Development. WHS and Pointshare will collaborate on the
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development and delivery of a Washington ▇▇▇▇▇▇.▇▇▇ web site as more
fully described on Attachment D.
b) Governance Committee. WSHA/WHS and Pointshare will establish a joint
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goverance committee comprised of two management members from each of
WHS and Pointshare to oversee the development and delivery of the
Washington ▇▇▇▇▇▇.▇▇▇ web site. All actions by the Governance
Committee are subject to the approval of the majority of the members,
including any decision to give online content and transactional
trading partner access to the Washington ▇▇▇▇▇▇.▇▇▇ web site. If the
goverance committee is deadlocked on a decision, at Pointshare's
discretion, the decision shall be tabled for a period of at least one
year.
c) Advisory Committee. WSHA/WHS and Pointshare will establish an advisory
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committee comprised of one management member from each of WHS and
Pointshare as well as other mutually agreed upon healthcare industry
leaders to provide advice and recommendations on the development and
services offered through the Washington ▇▇▇▇▇▇.▇▇▇ web site. The
advisory committee's recommendations are advisory only and shall not
be binding upon either party.
d) Private-Label Sites. Nothing herein shall be construed as precluding
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or restricting Pointshare from continuing to provide other portals to
Pointshare content and services on a private-label basis."
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1. Section 5(b) and (c) of the Original Agreement are hereby deleted and
replaced in their entirety with the following sections 6(b), (c) and (d);
the remainder of section 6 is renumbered accordingly:
"b) Revenue Sharing.
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1. Definitions.
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"Hospital Receipts" means revenues collected by Pointshare from hospitals
located in Washington state for any services including but not limited to
services for hospitals, physicians, MSOs, OP reference labs and other
providers that are either owned by the hospital or for whom the hospital
sponsors services. For purposes of this Agreement, "owned" shall mean
control of at least 50% of the voting interests of an entity.
"Government Receipts" means revenues collected by Pointshare from the
specific government and non-government entities and agencies listed on
Attachment F that are located or doing business in Washington State, and
which relates to the activities of those entities and agencies in WA State,
as such list is updated from time to time by mutual agreement of the
parties; provided, however, revenues from the following entities or
constituents shall not be included in Government Receipts: health insurance
companies, health insurance third party administrators, physicians, home
health agencies, suppliers or other organizations that provide health care
directly to patients.
"Non-Hospital Receipts" means all revenues collected by Pointshare from
sources other than hospitals located in Washington State. These other
sources consist primarily of physician revenue paid directly by physician
groups.
"Net Receipts" means receipts less charges for Third Party services. For
example, if Pointshare or WHS collects $1,000 from subscribers for the MD
Consult third party service, and MD Consult is, in turn, paid $800 for the
use of the content by Pointshare, the Net Receipt is $200.
"Pointshare-developed Applications" means those online services developed
exclusively by Pointshare including but not limited to Multi-payer
Eligibility Verification Service, ReferralPoint, ContactPoint, InfoPoint,
Hospital Community Outreach services, Clinical Messaging and Pre-admit
authorizations.
"Third Party Services" means those online services provided by parties
other than Pointshare and WHS including but not limited to CodeCorrect,
QuadraMed and MD Consult that are accessed by Washington ▇▇▇▇▇▇.▇▇▇
subscribers from the Washington ▇▇▇▇▇.▇▇▇ site.
"WHS-developed Content" means those online services developed exclusively
by WHS including but not limited to Washington Electronic Billing ("WEB")
Services.
2. Revenues Sharing.
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(A) During the term of the Agreement, Pointshare shall pay WHS a fee equal
to [***] of all Hospital Receipts and Government Receipts paid in
connection with Pointshare-developed Applications. Pointshare is
entitled to retain the balance of such Hospital Receipts and
Government Receipts.
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(B) During the term of the Agreement, WHS shall pay Pointshare a fee equal
to [***] of all Hospital Receipts, Government, and Non-Hospital
Receipts paid in connection with WHS-developed Content. WHS is
entitled to retain the balance of such Hospital Receipts, Government
Receipts, and Non-Hospital Receipts received in connection with WHS-
developed Content.
(C) During the term of the Agreement, Pointshare shall pay WHS a fee equal
to [***] and WHS shall pay Pointshare a fee equal to [***] of all net
receipts from Hospital Receipts, Government Receipts, and Non-Hospital
Receipts received by either party in connection with Third Party
Services.
(D) With the exception of WHS-developed Content, neither party will be
obligated to pay the other party any fee in connection with Non-
Hospital Receipts received by such party.
"c) Payments. Payments owed in connection with Section 6(b) above shall be
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payable to the other party within thirty (30) days following receipt of the
applicable Hospital Receipts.
"d) Warrant. In consideration of WSH and WSHA's collaboration and efforts
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regarding Section 4(1), Promotion Outside Washington, Pointshare will grant
WHS, subject to Board approval, a warrant to purchase up to 5,000 shares of
Pointshare's Common Stock at an exercise price equal to $0.250, or such price as
is determined by Pointshare's Board of Directors to be the appropriate value for
the company's common stock as of the date of the board approval. The warrant
will have a term of five (5) years."
4. A new Section 7 is added to the Original Agreement as follows, and all
subsequent Sections are re-numbered accordingly:
"7. Non-Compete.
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Except with WHS prior written consent, Pointshare shall not market or
sell any services in WA State that are directly competitive with the "WEB
Services" currently offered by WHS as described more fully in Attachment E.
5. Section 6(b) of the Original Agreement (which after renumbering under this
Addendum will be Section 8(b)) is amended to add the following phrase to
the end of the last sentence in such Section:
";provided that annual Hospital Receipts and Government Receipts, in the
aggregate of $1.0 million or more after the second anniversary of this
Agreement shall be deemed satisfactory sales results by the parties."
6. Section 6(f) of the Original Agreement (which after renumbering under this
Addendum will be Section 8(f)) is amended as follows:
"f) Survival of Terms. The provisions of Sections 2, 8, 9, 13, 14, 15, and
16 of this Agreement, and all payment obligations accrued during the term
of this Agreement, shall survive the expiration or termination of this
Agreement for any reason. All other rights and obligations for the parties
shall cease upon termination of this Agreement."
7. A new Section 18 is added to the Original Agreement as follows:
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"19. ASSIGNMENT
Neither party may assign any of its rights or obligations under this
Agreement to any other party without first obtaining the other party's
written approval; provided, however, that either party may assign this
Agreement to a successor entity pursuant to a merger, acquisition, asset
sale or other corporate reorganization. The terms and conditions of this
Agreement inure to the benefit of and are binding upon the respective
permitted successors and assigns of the parties."
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of
the day and year above mentioned, intending to be legally bound.
For: WASHINGTON HOSPITAL SERVICES, INC.
By: /s/ ▇. ▇▇▇▇▇▇
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Position: President
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For: POINTSHARE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Position: CEO
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Attachment D
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Washington ▇▇▇▇▇▇.▇▇▇
1. Washington ▇▇▇▇▇▇.▇▇▇: WHS and Pointshare will collaborate on the
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development and delivery of a Washington ▇▇▇▇▇▇.▇▇▇ web site that will be
the default landing page available for all WA state hospitals, payers, and
providers. This will be a subscription web site with secure network
connections from Pointshare, WSHA, WA hospitals, providers, and payers.
The site will include links to WSHA virtual communities and other content,
a pre-packaged bundle of Pointshare online service channels including but
not limited to multi-payer Eligibility, ContactPoint Electronic Healthcare
Directory, InfoPoint, and Pointshare and other third party premium
channels.
2. Other Enterprise Landing Pages: The larger supernet (statewide healthcare
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network connecting physicians, hospitals, health plans and other
participants) is a collection of many subnets securely linked to Pointshare
today. Pointhshare will continue to provide other portals to the same
Pointshare content also available on Washington ▇▇▇▇▇▇.▇▇▇ when clients
want their own private-labeled site for a landing page. Examples include
Providence Health Systems, Inland Northwest Health Services (INHS), Cascade
Healthcare Alliance, Evergreen Community Health, the WA State Academy of
Family Practice, and others.
3. WEB Services. Pointshare and WHS will work together to evaluate
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web-enabling the WEB services (described in Attachment E) and integrating
such WEB services with the Pointshare services. If and to the extent
Pointshare and WHS develop a web-enabled WEB service, the parties will a)
negotiate in good faith a revenue sharing arrangement that reflects the
relative contribution of the parties and b) Pointshare will work with WHS
to develop a plan for Pointshare to install and support any new web--
enabled version of the WEB services for Pointshare subscribers. WHS shall
pay a reasonable fee to Pointshare for installation and professional
services provided by Pointshare in connection with the web-enabled version
of WEB.
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Attachment E
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Following is a description of the WEB services offered by WHS;
(a) Direct entry of fee-for-service claims into the state's Medicaid
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Management Information System (MMIS). Claims are keyed directly into
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the system that DSHS uses to adjudicate, thus passing through the
exact edits that must be satisfied in order for payment to be assured.
Once through these edits, a claim is usually paid in 7-10 days.
(b) Direct entry of claims in the state's Labor and Industries (L&I)
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Medical Information Payment System (MIPS). Claims are keyed directly
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into the system that L&I uses to adjudicate, thus passing through the
exact edits that must be satisfied in order for payment to be assured.
Once through these edits, a claim is usually paid in 7-10 days.
(c) Claim status inquiries for L&I claims. Allows providers to track where
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claims are in the L&I adjudication process.
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Attachment F
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Following is a list of government organizations located in the state of
Washington from which revenues will constitute "Government Receipts":
State of Washington
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Department of Services for the Blind
Department of Corrections
Office of the Economic and Revenue Forecast Council
Office of the Family and Children's Ombudsman
Office of Financial Management
Office of the Forecast Council Board of Registration for Funeral Directors and
Embalmers
Board of Health
Department of Health
Health Care Authority
Health Care Facilities Authority
Department of Information Services
Office of the Insurance Commissioner
Department of Labor and Industries
Washington State Legislature
Medical Quality Assurance Commission
Military Department
Office of the Family and Children's Ombudsman
Washington State Board of Pharmacy
Department of Revenue
Department of Social and Health Services
Washington State Patrol
Department of Veterans Affairs
Local Government
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Local Public Health Departments such as:
Seattle-King County Department of Public Health
Kitsap County Health District
Chelan-▇▇▇▇▇▇▇ Health District
Spokane Regional Health District
Tacoma-▇▇▇▇▇▇ County Health Department
Federal Government
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Department of Social and Health Services
Department of Health and Human Services
Other Entities
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Healthcare standards setting organizations such as:
Joint Commission on Accreditation of Healthcare Organizations
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Local healthcare advocacy organizations such as:
Healthy Mothers Healthy Babies
Community Health Access Program
Northwest Aids Foundation
Babies First Steps
Aids Care Access Program
Washington Health Foundation
Local chapters of national health advocacy and disease-specific organizations
such as:
American Diabetes Association
American Heart Association
American Red Cross
American Cancer Society
Local and local chapters of national administrative healthcare professional
societies such as:
Healthcare Financial Management Association
American College of Healthcare Executives
Pacific Northwest Health Educators
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